A recent report from Sallie Mae shows that student loans are not, contrary to what many people believe, the main source of funding for most college educations. In fact, over 70 percent of all students enrolled in the 2015-16 school year did not take out any student loans. Instead, they made use of their own income and savings, their parents' income or savings, and the generosity of friends and relatives to make up for any costs that their grants and scholarships did not cover.
Most students who did take out loans to cover their education did so through the federal student loan program, which offers better interest rates and has a number of different repayment plans. Only about 8 percent of enrolled students used private loans this past year. Besides better interest rates and flexible repayment methods, those taking out federal loans on average borrowed less than $7,400 as opposed to the average $9,000 private loan. A small number of students, around 6 percent, took out both types of loans.
Parents also pitched in. Around 12 percent of students paid for some of their education through the federal PLUS loan program. These loans are taken out by the student's parents. Parents may also take out private loans to finance their children's education, but again, only a small percentage did so.
Overall, the average amount that a student borrowed for the 2015-16 school year was down by about 9 percent.
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